President Donald Trump says he has tariffs on hundreds of billions of dollars in more Chinese goods ready in his pocket - if it comes to that - while China says the USA has launched the biggest trade war in history.
Analysts at Bank of America Merrill Lynch forecast only a modest escalation in the US-China battle, adding: "However, we can't rule out a full-blown, recession-inducing "trade war".
The extent of the economic damage will depend on how far both sides go.
The Chinese government has said it will protect the "legitimate interests" of foreign businesses in China and lessen the fallout from a China-US trade war, in an apparent attempt to ease fears that Beijing could single out US businesses for retaliation.
China and the United States have held talks about how to de-escalate the trade war, but no agreements were reached.
The US trade deficit in goods with China stood at a record $375 billion in 2017.
"It is unfair competition to some degree for the U.S. So President Trump is trying to step in and do something about that", Nash said.
Donald Trump's trade war could potentially drag in products from other American trade partners, undermining relations.
Speaking hours after the tit-for-tat duties went into effect, Chinese Premier Li Keqiang said no one would emerge a victor from a trade war.
Chinese shares, which have been battered in the run-up to the tariff deadline, reversed earlier losses to close higher, but the yuan remained weaker against the dollar.
China's foreign minister said trade protectionism and unilateral actions were "short-sighted" and in a statement on Friday called on European counties to work with China to safeguard a globally free trade system.
Beijing said it would be "forced to make a necessary counterattack" after U.S. tariffs on $34bn of Chinese goods came into effect.
Stock markets have been jittery ahead of the announcement and are estimated to have lost market value due to trade tensions. The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.
"I've seen anywhere between $3,000 to $5,000 per automobile and overall higher prices", Nash said.
"Public security in the United States is not good", the embassy said, in a statement last week.
The White House said it would consult on tariffs on the other $US16b of products, and would apply these later.
"Trade war is never a solution", said Chinese Premier Li Keqiang.
China warned that while it has promised not to "fire the first shot", it would now be forced to "counterattack" in order to defend its core interests.
The Trump administration is confronting China over development tactics it says include stealing technology or pressuring foreign companies to hand it over.
Another $16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of US goods imports from China in 2017. Trump told reporters aboard the Air Force One.
Previously, Beijing had vowed to impose counter-tariffs of 25 percent would apply on U.S. agricultural and other products worth $34 billion.
The state-run China Daily fumed: "In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China".
"This is not economic Armageddon. There is no obvious end to this", said Louis Kuijs, chief Asia economist at Oxford Economics.